Hello from Dupont Circle! Your correspondent has finished his tour of the Bay Area (more to come) and is now in the Swamp for a series of meetings. Whenever we are asked what we do in DC, we think of the traditional phrase that opens Prime Minister's Questions in the UK where, according to the ritual, the first question to the prime minister is about his schedule, and the prime minister always answers with this wonderfully vacuous phrase: “I have had meetings with ministerial colleagues and others, and in addition to my duties in this House, I shall have further such meetings later today.”

Anyhow: the child tax credit has become a central issue in this presidential campaign. This is certainly surprising and amusing to those of us who remember the “reformocon” debates of the late 2000s and early 2010s (yes, all three of us). 

The Harris campaign has come out with its child tax credit proposal (no details, because that's just not how they do things), and vice presidential nominee JD Vance is notorious for his interest in pro-family policy. 

This, plus the 2025 deadlines for tax reform and the assorted budget issues, creates a strong sense that the CTC and other family-related fiscal transfers will be a big part of the discussion in the early years of any administration, and so wonks of all stripes have gotten in on the action with their own proposals. 

Which is why it may be a good time, before things start getting crazy in January, to widen the scope a little and ask a question that is so rarely asked in this process-obsessed town: what is the purpose of fiscal transfers to parents? 

We have some expertise on this, as some of our subscribers know your correspondent is originally a native of France, and France has been for over a century the pioneering country when it comes to pro-family policy. 

While pro-family policy began in France in the 1930s and arguably earlier, the most important parts of the system were built in 1944 and 1945 as the new regime essentially designed a new welfare state almost from scratch. 

This welfare state was to have (and has had since, more or less) three “pillars”: health care (which doesn't concern us here), redistribution, and family policy. 

Note—and this is the point—that “redistribution” and “family policy” are two different items. This is very important. Of course, any policy that involves fiscal transfers is “redistribution” in some tautological sense, but it was very important to the framers of the post-WW2 French settlement that these two pillars were separate. They were covered by different laws, operating under different formulas. They were also operated by different organs of government (redistribution is handled by the central state, while family policy is the prerogative of local government bodies called CAF).

This was because, the French being very good at drawing conceptual differences, these two pillars had different functions. 

The purpose of the “redistribution” pillar was to reduce inequality between social classes. Its purpose was to help the poor through transfers and to increase the sense of national unity by reducing the gap between rich and poor. 

The purpose of the “family” pillar was to reduce inequality not between social classes, but between households of a same social class who make different life choices. The purpose was to make sure that a doctor (say) who chooses to have kids is not penalized financially for that choice relative to his doctor peers. Pro-family policy is motivated by a recognition that having children is making an investment into the future of one's nation; however, like all investments, there is a large upfront cost, and therefore (at the very least) couples who make the investment should not face a disincentive to making these choices. 

As one immediately grasps, the implication of this (and this was a slogan in France for many decades) is that family policy is not a social program. And therefore, means-testing the programs (whether by reducing it for the affluent or making a tax credit non-refundable so that households that pay no income tax don't get it) goes directly against its purpose.

By the way, yes: at least implicitly, this punishes “childless cat ladies.” Just as progressive income tax punishes "the rich." This is, again, tautological: to tax Peter to give money to Paul "punishes" Peter. This may or may not be a bad thing, but until the interns at the Cato Institute stage a coup, we in the modern West live in states that engage in fiscal transfer. What matters is the purpose of the transfer. Redistribution between social classes, for the purposes of helping the poor and increasing social cohesion, is one goal of public policy. The goal of pro-family policy is to redistribute within each social class.

As Lyman Stone, demographer at the Institute of Family Studies, has demonstrated in a magisterial report, French pro-family policy has been very successful. This pillar remained in place from 1944 to 2013 (a pretty good run, to be fair), until François Hollande, whilst Angela Merkel held a gun to his head, decided to means-test the program. (Obviously it didn't hurt that affluent families with many kids tend to be conservative Catholics who vote for the right, and poor families with many kids tend to be of non-European-origin immigrant descent and vote for the left.)

As Brad Wilcox of the Institute for Family Studies points out, citing a study by Nelly Elmallakh, the effect on birth rates was stark and immediate, accelerating the decline in French birth rates. 

Policy matters. The design of policy matters. And one way to design policy well is to remember its purpose.

Policy News You Need To Know

#Process – Congratulations to Sen. Rubio a friend of PolicySphere on winning the Innovation and Modernization award from the Congressional Management Foundation! Here's the press release and here's a nice video his office did about the award.

#Shutdown – We're going to have to cover a potential shutdown more. Sen. Mike Lee has an op-ed in The Hill calling to attach the SAVE Act, “which would require proof of citizenship for people registering to vote in federal elections, including this November” to the September spending bill, and acting Senate GOP leadership for trying to block it. So this movement has graduated from xeets to inside-the-Beltway op-eds. It is surely a good measure, but it's not hard to understand why Republicans don't want a shutdown fight in the September of an election year... Stay tuned.

#PublicHealf – The ever-smart Brad Wilcox has a response up at NR on a new report from the Surgeon General classifying “parental stress” as a “public-health problem” and proposing a slate of what Wilcox calls “nanny-state policies” to address it. Writing with Naomi Schaefer Riley, he says that's wrong. “Yes, surgeon general, parents are stressed. But their lives are less lonely, more meaningful, and happier.”

#Politics – You know we try to keep political coverage at a minimum, but lots of people are talking about the new NYT/Siena poll which shows Harris and Trump neck-and-neck, after her post-nomination and post-convention bounce. Our view, as a very-often-flawed political observer, is that it's going to be a very close one and will come down to the wire. In any case, ex-left journalist Michael Tracey had what we thought was the most interesting observation from that poll: “Trump's share of Black voters, September 2020 NYT/Siena poll: 7%; Trump's share of Black voters, September 2024 NYT/Siena poll: 17%; Trump's share of Latino voters, September 2020 NYT/Siena poll: 31%; Trump's share of Latino voters, September 2024 NYT/Siena poll: 42%.” We also liked this observation from GOP political consultant Mike Madrid: “Ignore it if you’d like but NYT/Siena was a lot closer on the Latino vote numbers in 2020 than the Dem partisan pollsters saying ‘it’s not happening’ and those pollsters are saying it again this year.” We also liked this commentary from Nate Silver: “Highest-rated pollster in the country and a large sample size, too. Fortunately for Harris she has the debate this week and none of this will matter if she has a good night. But there has been a LOT of mediocre data for Harris lately. Don't listen to people on here who constantly whine about which polls are included in which polling averages and so forth. It's just partisan motivated reasoning and they don't know what they're talking about.”

#Chyna #AI – It looks like Chinese startups are able to get around sanctions on AI chips. Nvidia's AI chips are cheaper to rent in China than US, reports the Financial Times.

#Chyna #AI – Speaking of, interesting work from Nick Whitaker at City Journal: while US efforts have slowed China's development in AI, “[t]hese efforts have not gone far enough [...] in part because of the statutory limitations of the Bureau of Industry and Security (BIS). The ENFORCE Act seeks to rectify these limitations by giving the U.S. Commerce Department’s Bureau of Industry and Security the power it needs to maintain the American advantage in AI.”

#Chyna – Speaking of, the WSJ reports: “Scholars researching everything from urban development to religious belief in China say they are running into barriers—many erected by Beijing but some arising at home—that increasingly hamper their work. A relentless tightening of political controls by Chinese leader Xi Jinping has curtailed access to even routine information and throttled research into topics that were once open. Interactions between people in China and foreigners are subject to intensifying state surveillance, stymying the flow of ideas. Those obstacles have led some China scholars to change their fields of study, or reprise research techniques developed during the Mao Zedong era, when the country was largely closed off to the rest of the world.”

#Immigration #LaborMarket – High-skill immigration advocates claim there is a labor shortage in technology. This seems hard to believe given that STEM worker salaries have been flat since 2008, according to government data unearthed by the Center for Immigration Studies. That this STEM worker shortage meme is a myth has been established for a long time, see e.g. this piece from when The Atlantic was a reputable newspaper in 2014. Hedge fund manager and ex-academic Eric Weinstein has also done good work on this issue.

#HigherEd – For those keeping score at home, Harvard is dead last with a perfect score of 0 in FIRE's 2025 College Free Speech Rankings. Why should universities, particularly universities whose ostensible mission is to train the next generation of American decisionmakers, which refuse to respect the spirit, if not the letter, of the First Amendment, receive taxpayer grants and tax exemptions? 

#Economics – Daron Acemoglu is a famous economist at MIT, famous mostly for a development economics book titled “Why Nations Fail.” Academics frequently end up tripping on their own shoelaces when they venture outside their area of expertise. (Acemoglu may not even be so great in his area of expertise, as his thesis on development has been heavily criticized, but this is another discussion for another day.) Acemoglu seems deeply triggered by the existence of Elon Musk, for some reason, and has concluded from that that billionaires should be taxed more heavily. Or something. It's hard to tell. This is a good time to remind him and our readers that there is no demonstrated causal relationship between high rates of taxation and low inequality (or vice versa). See here. Just as with Harvard's disastrous FIRE score, events like this raise the question of why taxpayers should subsidize unserious people who are certainly entitled to their opinion, but use the prestige granted by their positions, positions which are subsidized by the taxpayer, to take an outsize role in the public debate, one which in many cases is not justified by actual expertise.